Forex - EUR/USD holds steady after disappointing U.S. trade data

The euro held steady against the U.S. dollar on Wednesday, after the release of disappointing U.S. trade balance data, as renewed concerns over a possible U.S. military strike against Syria continued to linger. 

EUR/USD hit 1.3157 during European afternoon trade, the session low; the pair subsequently consolidated at 1.3168, inching down 0.01%. 

The pair was likely to find support at 1.3090, the low of July 19 and resistance at 1.3227, the high of September 2. 

Official data showed that the U.S. trade deficit widened more-than-expected in July, falling to USD39.2 billion from a downwardly revised USD34.5 billion deficit the previous month. Analysts had expected the trade deficit to widen to USD38.7 billion in July. 

The data came as investors continued to speculate over the timing of the Federal Reserve’s widely expected reduction in monthly bond purchases after data on Tuesday showed that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in August. 

Investors were now looking ahead to Friday’s highly-anticipated U.S. nonfarm payrolls report which is seen as key to the Fed’s decision on tapering. 

Meanwhile, investors remained cautious after top congressional leaders, including Republican House Speaker John Boehner and Democrat Nancy Pelosi said they would back President Obama's call for military intervention in Syria. 

In the euro zone, data earlier showed that the final reading of Germany’s services purchasing managers' index came in at 52.8 in August, up from a preliminary reading of 52.4. The euro zone’s services PMI dipped to 50.7, from an initial estimate for 51.0. 

The euro was lower against the pound with EUR/GBP shedding 0.31%, to hit 0.8437. 

Also Wednesday, data showed that activity in the U.K. services sector expanded at the fastest rate in six-and-a-half years in August. 

Markit said the U.K. services purchasing managers’ index rose to 60.5 in August, the highest since December 2006, from 60.2 in July. Economists had forecast a decline to 59.0.